USDOL/OALJ Reporter: ARB Decision Caselist - April 2017

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SUMMARY DECISION; ALLEGATION THAT RESPONDENT’S VIOLATION OF STATUTES OTHER THAN THOSE ENUMERATED IN THE SOX WHISTLEBLOWER PROVISION CAUSED SHAREHOLDER FRAUD FOUND NOT TO BE SUFFICIENT TO WITHSTAND MOTION FOR SUMMARY DECISION

SUMMARY DECISION; ALLEGATION THAT RESPONDENT IMPROPERLY BILLED CMS FOR TELEMENTAL EVALUATIONS IN VIOLATION OF SOX FOUND INSUFFICIENT TO WITHSTAND MOTION FOR SUMMARY DECISION AS NOT OBJECTIVELY REASONABLE WHERE COMPLAINANT HAD BEEN PROVIDED EVIDENCE FROM THE RESPONDENT THAT IT DID NOT BILL CMS FOR SUCH SERVICES AND COMPLAINANT’S BELIEF WAS SPECULATIVE AND WITHOUT EVIDENTIARY SUPPORT

In Gallas v. The Medical Center of Aurora , ARB Nos. 15-076, 16-012, ALJ Nos. 2015-ACA-5, 2015-SOX-13 (ARB Apr. 28, 2017), the ALJ dismissed the Complainant’s Affordable Care Act and Sarbanes-Oxley Act complaints. The ARB affirmed the ALJ’s dismissal of the SOX complaint on summary decision, but vacated the dismissal of the ACA complaint.

Under the facts as alleged by the Complainant, she was a registered nurse employed by the Respondent medical center as a psychiatric evaluator. The Complainant complained about and refused to perform psychiatric evaluations through telecommunications because she was concerned about the legality of and standard of care associated with the Respondent’s “TeleMental Health” program. The Complainant, who had been given a negative performance evaluation and was subject to weekly formal supervision, continued to complain about the program until her discharge after refusing to perform a TeleMental evaluation. The discharge was based on failure to follow management’s instructions concerning the performance of her job.

The Complainant had complained that the TeleMental Health program violated the SOX because the Centers for Medicare and Medicaid Services (CMS) limits reimbursement for telehealth services to those rendered in rural areas and thus any billing by the Respondent for these services would be fraudulent and illegal. The Complainant also alleged that the Respondent was committing illegal acts and defrauding her and other investors. In the complaint before the ALJ, the Complainant alleged that the TeleMental Health program violated the SOX insofar as the practice amounted to “a fraudulent and deceitful practice or representation causing intimidation and putting the patient under duress.” Slip op. at 5. The Respondent filed a motion for summary decision. Before ruling, the ALJ permitted the Complainant to amend her complaint. Thereafter, the ALJ dismissed the SOX claim, finding that the Complainant had not provided evidence sufficient to generate a genuine issue of material fact regarding whether she reasonably believed that the Respondent had violated the provisions of the SOX. The ARB affirmed, because none of the Complainant’s complaints implicated any of the six enumerated categories of protected activity under the SOX. The ARB found that the ALJ correctly rejected the Complainant’s argument that the Respondent’s violation of other statutes violated the SOX because it had the effect of defrauding shareholders. The ARB stated: “The ALJ correctly explained that an assertion that violations of other statutes could adversely affect the employer’s financial condition is insufficient to trigger protection under the SOX.” Id . at 8 (footnote omitted). The ARB also affirmed the ALJ’s determination that the Complainant’s assertions that the Respondent improperly billed for the TeleMental Health Program and filed a false form 10K with the SEC were not objectively reasonable beliefs because they were contradicted by evidence provided by the Respondent to her, and were speculative and lacked factual foundations. The Respondent had reported to staff that company hospitals do not bill Medicare, Medicaid, or any health insurance provider for telemental health or face-to-face evaluations.

MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM UPON WHICH RELIEF MAY BE GRANTED; “FAIR NOTICE” STANDARD IN ADMINISTRATIVE WHISTLEBLOWER ADJUDICATION; TO STATE A WHISTLEBLOWER CLAIM UNDER THE AFFORDABLE CARE ACT, A COMPLAINANT NEED ONLY ALLEGE ACTIVITY OR DISCLOSURES “RELATED” TO ACA’S SUBJECT MATTER

In Gallas v. The Medical Center of Aurora , ARB Nos. 15-076, 16-012, ALJ Nos. 2015-ACA-5, 2015-SOX-13 (ARB Apr. 28, 2017), the ALJ dismissed the Complainant’s Affordable Care Act and Sarbanes-Oxley Act complaints. The ARB affirmed the ALJ’s dismissal of the SOX complaint, but vacated the dismissal of the ACA complaint.

Under the facts as alleged by the Complainant, she was a registered nurse employed by the Respondent medical center as a psychiatric evaluator. The Complainant complained about and refused to perform psychiatric evaluations through telecommunications because she was concerned about the legality of and standard of care associated with the Respondent’s “TeleMental Health” program. The Complainant, who had been given a negative performance evaluation and was subject to weekly formal supervision, continued to complain about the program until her discharge after refusing to perform a TeleMental evaluation. The discharge was based on failure to follow management’s instructions concerning the performance of her job.

The ARB began its analysis of the ALJ’s dismissal by reviewing the law in administrative whistleblower litigation on motions to dismiss for failure to state a claim upon which relief may be granted:

    Federal Rule of Civil Procedure 12(b)(6) and 29 C.F.R. Part 18, allow a party to move for dismissal of a case for failure to state a claim upon which relief can be granted. However, because “federal litigation materially differs from administrative whistleblower litigation within the Department of Labor ... a different legal standard for stating a claim” is afforded in cases pending before the agency. To survive a motion to dismiss in this administrative proceeding, Gallas’s ACA complaint is reviewed to determine whether it provides “fair notice of [her] claim.” In Evans [ v. EPA , ARB No. 08-059, AL.J No. 2008-CAA-3 (ARB July 31, 2012), the Board explained that “fair notice” for purposes of surviving a motion to dismiss requires a showing that the complaint contains: “1) some facts about the protected activity and alleging that the facts relate to the laws and regulations of one of the statues in the [DOL’s] jurisdiction; (2) some facts about the adverse action; (3) an assertion of causation, and (4) a description of the relief that is sought. ”

Slip op. at 8-9 (footnotes omitted). In the instant case, the ALJ granted the Respondent’s motion based on her determination that the Complainant did not allege any ACA-protected activity. The ARB found that the ALJ had failed to appreciate the significance of the language of the ACA that a complainant need only allege a “reasonable belief” that a violation occurred under 29 U.S.C.A. § 218c(a)(2) and (5). The ARB noted that it had repeatedly ruled in analogous SOX cases that “‘[b]ecause a determination regarding the reasonableness of [a complainant’s] alleged protected activities requires an examination of facts,’ it is rarely appropriate for ALJs to dismiss complaints at the pleading stage on that basis.” Slip op. at 10, quoting Sylvester , ARB No. 07-123, slip op. at 13, 16. The ARB wrote:

    Further, as we stated in Evans, ARB No. 08-059, slip op. at 9, Gallas need only allege “some facts about the protected activity, showing some ‘relatedness’ to the laws and regulations of one of the statutes in our jurisdiction.” This is not a demanding standard. A disclosure is protected by the ACA if it “relate[s] to a general subject that was not clearly outside the realm covered by the [statute]. ” …

    In particular, the ALJ erred by applying pleading standards that are not applicable to these administrative whistleblower complaints. As we explained in Evans , “[a]dministrative complaints filed with DOL are informal documents that initiate an investigation into allegations of unlawful retaliation.” The ALJ specifically stated, “Gallas has failed to identify any specific provisions of the ACA which she reasonably believed the Respondent violated.” The ALJ mistakenly indicated that a complainant must cite to a specific section of the ACA to support her claim and that before there can be a valid whistleblower complaint under ACA, there must first be an ACA violation. Established precedent holds otherwise. In Sylvester , ARB No. 07-123, slip op. at 16, we explained that a SOX whistleblower complainant need not identify a specific provision of law, nor even an actual violation at the pleading stage. The rationale for the liberal pleadings standards reflected in Sylvester turned largely on the informal nature of administrative filing requirements for complaints filed under the whistleblower provisions, including those of the SOX, which the Department of Labor administers.

    Thus, to state a whistleblower claim under the ACA, Gallas need only allege activity or disclosures “related” to ACA’s subject matter. In her OSHA complaint, Gallas plainly states that she “informed” her employer that she “refuse[ d] to perform emergency psychiatric evaluations via Telemental health, substandard level of care” and that “TELEMENTAL HEALTH violates EMTALA.” In her Amended Complaint, Gallas further alleged that “she voiced her objections, concerns and refusal based on her reasonably [sic] belief this process violated several Federal statues, HIPPA [sic], EMTALA, and [put] her professional license at risk.” Gallas also alleged that she complained that the Respondent was improperly “requiring a Pre-Authorization for Insurance before Admittance.”

    The ALJ erred when she dismissed Gallas’s claims relating to EMTALA, HIPAA, and improper pre-authorization, for not invoking the ACA’s employee protection provisions. While the ALJ correctly noted that ACA Title I does not explicitly incorporate either EMTALA or HIPPA, the subject matter of each of these statutes is not merely referenced in the ACA but explicitly addressed as we set forth below. Indeed, HIPAA access to coverage reforms provided both the ACA’s legislative precedent, as well as its federal/state enforcement framework. And the ACA either extended or rendered moot many of HIPPA’s portability rules, which require outright elimination of preexisting condition exclusions. In addition to the more publicized reforms that the ALJ noted, the ACA includes many other general reforms, including the use of best clinical practices and quality care reporting, patient protections related to emergency care, and ten specified coverage categories known as “essential health benefits” that include emergency services and mental health and substance use disorder services and behavioral health treatment. Gallas alleged protected activity related to all of these reforms.

Slip op. at 10-11 (footnotes omitted). The ARB found that the Complainant’s alleged protected activity relating to EMTALA, HIPAA, and pre-authorization (by insurer of services) were “sufficiently related to matters contained in ACA to invoke protection under the ACA’s whistleblower provisions and to satisfy the threshold requirements to survive a motion to dismiss under the Evans standard.”

One member of the ARB wrote a concurring opinion because he disagreed with the majority’s interpretation of the “fair notice” legal standard. This member stated that “I am of the opinion that in ruling upon a motion to dismiss for failure to state a claim, the federal court pleading requirements that both the ALJ in this case and the majority on appeal effectively embrace are inapplicable to ACA whistleblower claims, for the reasons I’ve previously articulated in my separate opinions in Sylvester v. Parexel Int’l , ARB No 07-123, ALJ No. 2007-SOX-039, slip op. at 28-33 (ARB May 25, 2011), and Evans v. E.P.A. , ARB No. 08-059, ALJ No. 2008-CAA-003, slip op. at 19-24 (ARB July 31, 2012).” This member stated that he “would not limit the ‘fair notice’ standard to only a review of the allegations of a complainant’s complaint (or amended complaint)”and that “in response to a motion to dismiss a whistleblower action for failure to state a claim for relief, the complainant should be afforded the opportunity to supplement the record before the ALJ with such relevant pleadings, legal memorandum, and evidence (documentary or otherwise) as the complainant considers necessary in order to defend against the motion to dismiss.”

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CONTRIBUTING CAUSE; COMPLAINANT IN FRSA CASE IS NOT REQUIRED TO PROVE ANIMUS OR MOTIVE TO RETALIATE, AND DECISION MAKER’S BENEVOLENT STATE OF MIND IS NOT A DEFENSE

CLEAR AND CONVINCING EVIDENCE STANDARD; ALJ PROPERLY FOCUSED ON IMPETUOUSNESS OF RESPONDENT’S RESPONSE TO PROTECTED ACTIVITY

In D’Hooge v. BNSF Railways , ARB Nos. 15-042, -066, ALJ No. 2014-FRS-2 (ARB Apr. 25, 2017), the Complainant was long-term engineer for BNSF, and had a desirable route because of its pay schedule, regular hours, and infrequent weekend work. The Complainant developed neck and back pain, and complained several times of “rough riding” locomotives and rough track conditions. The Respondent’s Yardmaster had become frustrated with performance of the crew the Complainant worked with, and warned several times that the route would be abolished (i.e., the route would filed from a general board or pool) if performance did not improve. On April 5, 2012, the Complainant reported (or “bad-ordered”) all three cars in a consist (a train of joined cars) as too rough. Bad-ordering required the cars to be sent for inspection. The Trainmaster jumped to the conclusion that the crew had bad-ordered the cars in bad faith because the crew did not want to finish their work and because it was highly unusual to report an entire consist. The Trainmaster took into consideration previous instances with the crew not finishing their work late in the shift which the Trainmaster thought should have been completed. Later that evening, after discussing the matter with the Superintendent of Operations, the Trainmaster abolished the route and decided to fill the work from a rotating off-the-board crew. The Trainmaster later testified before the ALJ that the failure to complete the work and his perception that the bad-ordering had been in bad faith were the straw that broke the camel’s back. The Trainmaster acknowledged that he had not followed company procedure when suspecting a fraudulent report, stating he thought abolishing the route would address the performance problem without potential disciplinary action. The Complainant filed an FRSA complaint alleging that the favorable route had been abolished because he had bad-ordered three locomotives. Following a hearing, the ALJ found that FRSA protected activity contributed to the Trainmaster’s decision and that he would not have abolished the route at that time if the Complainant had not reported the locomotives. The ALJ awarded $906 in back pay and $25,000 in punitive damages. The Respondent appealed the ALJ’s finding of a violation of the FRSA and the decision to award punitive damages. The Complainant appealed the ALJ’s attorney fee award, the ALJ having denied some expenses and reduced the award for only partial success. The ARB consolidated the appeals and affirmed the ALJ’s decision.

Good faith reporting as protected activity

On appeal, the Respondent did not challenge whether the Complainant’s reports of an injured neck or rough riding locomotives were protected activity under FRSA, but rather only whether the reports of rough riding had been made in good faith. The ALJ had found that the FRSA requires only that a complainant subjectively believe his or her reporting and does not require that a complainant prove that his safety complaint was objectively held in good faith. The Respondent argued on appeal that the FRSA requires that a complainant prove both a subjective and objective component. The ARB held that substantial evidence supported the ALJ’s finding that the Complainant’s actions were protected under either the subjective or objective standard of good faith.

Contributing cause; complainant is not required to prove animus or motive to retaliate, and decision maker’s benevolent state of mind is not a defense

The ARB found that substantial evidence supported the ALJ’s findings that the abolishment of the fixed route was adverse action and that the Complainant’s bad-ordering the locomotives contributed to the abolishment of the fixed route. The ARB was not persuaded by the Respondent’s argument on appeal that the route was abolished only because of the crew’s continued nonperformance, there being direct testimony by the Trainmaster that had he not learned of the Complainant’s hazardous safety condition report he would not have terminated the route that same evening. The ARB also rejected the Respondent’s argument that the route change was a lenient alternative to a disciplinary investigation, and the ALJ erred by concluding that neither animus nor motive are required to prove causation. The ARB ruled that the Trainmaster’s benevolent state of mind was not a defense to the statutory contributing cause standard, citing Petersen v. Union Pac. R.R. Co. , ARB No.13-090, ALJ No. 2011-FRS-017, slip op. at 3 (ARB Nov. 20, 2014) (“[N]either motive nor animus is required to prove causation under [FRSA] as long as protected activity contributed in any way to the adverse action.”); Williams v. Domino’s Pizza , ARB No. 09-092, ALJ No. 2008-STA-52, slip op. at 6, 9 n.6; Menendez v. Halliburton, Inc. , ARB Nos. 09-002, -003; ALJ No. 2007-SOX-005 (ARB Sept. 31, 2011).

Clear and convincing evidence defense; ALJ correctly focused on Respondent’s impetuous response to perceived bad faith of protected activity on day it occurred, even though there might have been other reasons for adverse action during the season or a more considered assessment

The ARB also affirmed the ALJ’s finding that the Respondent did not prove by clear and convincing evidence that it would have taken the same action absent the Complainant’s report of the locomotive bad-ordering. The ARB found that the ALJ properly focused on action taken the day of the protected activity, even though the route might have been altered or suspended during the summer months due to heat. The ARB acknowledged that a different conclusion might have been reached by the ALJ had the Trainmaster not acted so impetuously based on erroneous assumptions about the reason for the bad-order report. The ARB agreed with the ALJ that the Respondent could not show that it would have abolished the route the day of the protected activity in the absence of the Complainant’s bad-ordering of the locomotives.

ADVERSE ACTION; ABOLISHMENT OF FIXED ROUTE WITH FAVORABLE WORKING CONDITIONS FOUND TO CONSTITUTE ADVERSE ACTION UNDER THE FACTS OF THE CASE

In D’Hooge v. BNSF Railways , ARB Nos. 15-042, -066, ALJ No. 2014-FRS-2 (ARB Apr. 25, 2017), the ARB found that substantial evidence supported the ALJ’s finding that the conversion of a fixed route to which the Complainant had been assigned to a general bid route was adverse action. In this regard, the Complainant suffered a small loss in pay, regular hours, and a free weekend as a result of the conversion; the route had the most favorable working conditions in the division; and the Complainant had to rebid on other jobs with worse conditions after the abolishment of the fixed route.

AMENDMENTS TO COMPLAINT TO ALLEGE ADDITIONAL PROTECTED ACTIVITY PERMITTED WHERE THE AMENDMENTS RELATED BACK TO THE TIMELY COMPLAINT AND THE RESPONDENT SUFFERED NO PREJUDICE

In D’Hooge v. BNSF Railways , ARB Nos. 15-042, -066, ALJ No. 2014-FRS-2 (ARB Apr. 25, 2017), the Complainant amended his FRSA complaint to include two separate categories of protected activities. The ALJ found that the amendments (a report of a neck injury due to cumulative stress, and a report of a rough track) related back to the Complainant’s timely complaint of based of his report of rough riding or unsafe locomotives. The ALJ thus considered all of the alleged protected activities. On appeal, the Respondent argued that the ALJ erred in ruling that the amendments to the complaint were timely, but the ARB agreed with the ALJ that the amendments related back to the original complaint arising out of the same fact pattern. See 29 C.F.R. § 18.36 (2016); Fed R. Civ. P. 15(c). The ARB also determined that the Respondent suffered no prejudice by the amendment to include additional protected activities.

PUNITIVE DAMAGES; STATE OF MIND OF MANAGER BASED ON MISTAKEN ASSUMPTION; LARGE RATIO BETWEEN BACK PAY AWARD AND PUNITIVE DAMAGE AWARD

In D’Hooge v. BNSF Railways , ARB Nos. 15-042, -066, ALJ No. 2014-FRS-2 (ARB Apr. 25, 2017), the ALJ awarded $906 in back pay and $25,000 in punitive damages. The Respondent appealed the punitive damages award. The ARB explained FRSA punitive damages law:

    Relief under FRSA “may include punitive damages in an amount not to exceed $250,000.” Punitive damages require reckless disregard or willful violations of law. Smith v. Wade , 461 U.S. 30, 51 (1983). The fact-finder considers the actor’s state of mind in relation to the law. Punitive damages are appropriate for intentional and egregious violations of the law. Gross or reckless indifference to the law can establish the intentional component needed for willfulness. Kolstad v. Am. Dental , 527 U.S. 526, 535-36 (1999). An employer may avoid punitive damages when it has made a good-faith effort to comply with the law. Youngermann v. United Parcel Serv. , ARB No. 11-056, ALI No. 2010-STA-047 (ARB Feb. 27, 2013). The employer relying on the affirmative defense of good faith has the burden of proof.

Slip op. at 10 (footnote omitted).

State of mind; ALJ did not err in awarding punitive damages despite manager’s mistaken assumption about whether protected activity was in bad faith where substantial evidence supported findings that the manager failed to adequately investigate before making a decision impacting a condition of employment

In the instant case, the ALJ found reckless disregard of law, and that the need for deterrence applied, because the Complainant’s Trainmaster had abolished a fixed route with favorable working conditions that the Complainant had been assigned to, before investigating the Complainant’s “bad-order” report of rough-riding locomotives, and had wrongly assumed that the report was made in bad faith. The Respondent argued that the ALJ erred because it did not have the requisite state of mind for reckless disregard, and it had operated in good faith. The Respondent argued that it adheres to anti-retaliation policies, and that a goal of deterrence would not be served because the Trainmaster who had made the decision to abolish the route had been under a mistaken belief about the crew’s bad faith in bad-ordering the locomotives. The Respondent also noted that the Trainmaster was no longer employed by the Respondent. The ARB, however, found the ALJ’s finding supported by substantial evidence. The Trainmaster had not followed protocol, had not investigated, and had merely assumed that the crew was trying to get out of work. The ARB noted that the ALJ stated that the need for punitive damages was directed to the Respondent’s failure to train its managers appropriately, and to discourage managers from making decisions that impact a worker’s condition of employment without the benefit of readily available information.

Large ratio between back pay award and punitive damage award found not excessive where the back pay was a low amount

The Respondent next argued that the ALJ’s award was excessive because the ratio between the back pay award and the punitive damages was approximately 25:1. The ARB noted that it reviews non-constitutional claims of excessiveness for abuse of discretion, and constitutional claims de novo, but that in the instant case it was not necessary to differentiate. The ARB stated: “Under either the abuse of discretion standard or the constitutional due process standard, we find that the ALJ’s award was not excessive. In another context, the ratio of 25:1 may present more concern, but here we focus on the low amount of back pay award to find that the ALJ’s award of punitive damages at the ratio of 25:1 is not excessive.” Slip op. at 12.

ATTORNEY FEE; ALJ MAY REDUCE ATTORNEY’S FEES BOTH FOR PARTIALLY SUCCESSFUL INTERRELATED CLAIMS AND FOR UNSUCCESSFUL UNRELATED CLAIMS; ALJ HAS A LARGE DEGREE OF DISCRETION AS TO THE AMOUNT OF THE REDUCTION

In D’Hooge v. BNSF Railways , ARB Nos. 15-042, -066, ALJ No. 2014-FRS-2 (ARB Apr. 25, 2017), the Complainant appealed the ALJ’s attorney fee award, the ALJ having denied some expenses, and having reduced the overall award by 50% because the Complainant had only been partially successful in his pursuit of various claims and damages. The ALJ cited Hensley v. Eckerhart , 461 U.S. 424 (1983).

The Complainant argued on appeal that the ALJ erred in reducing the overall award by 50% and wrongly relied on Avondale Indus. v. Davis , 348 F.3d 487 (5th Cir. 2003). The Complainant argued that the ALJ’s decision conflicted with cases decided subsequent to Hensley —specifically Muniz v. United Parcel Serv. , 738 F.3d 214 (9th Cir. 2013) and Schwarz v. Sec’y Health & Human Servs. , 73 F.3d 895 (9th Cir. 1995). The Complainant argued that Hensley is limited to denying fees for unrelated or alternate claims that were not successful, whereas in his case, he did not pursue unsuccessful unrelated claims. The Complainant argued that in Avondale the statute specifically requires a reduction of attorney’s fees pro rata with the amount of the award, whereas the FRSA does not. The Complainant also made a policy argument that the ALJ’s analysis might induce a lawyer to dissuade clients from pursuing anti-retaliation claims with less favorable odds. The Respondent argued that the case law supports a reduction for both partially successful interrelated claims as well as for unsuccessful unrelated claims, and highlighted that the Complainant had only been successful in wining 4.3% of the total amount he sought, and that the ALJ had rejected the Complainant’s claims for front pay and emotional distress.

The ARB found that Hensley and the case law supported the Respondent’s position. The ARB wrote:

Hensley states that fees for completely unrelated claims can be subtracted as Congress, in the analogous civil rights area, did not intend to award fees for unrelated and unsuccessful claims. Even for related claims, the measure of success can justify a reduction to be reasonable. Excellent results for interrelated claims may merit full rates and full hours. Limited or partial success may merit deductions, even large deductions to be reasonable. In Hensley , the Court explained the rationale for reducing an attorney’s fee based on the degree of success:

If, on the other hand, a plaintiff has achieved only partial or limited success, the product of hours reasonably expended on the litigation as a whole times a reasonable hourly rate may be an excessive amount. This will be true even where the plaintiff’s claims were interrelated, nonfrivolous, and raised in good faith. Congress has not authorized an award of fees whenever it was reasonable for a plaintiff to bring a lawsuit or whenever conscientious counsel tried the case with devotion and skill. Again, the most critical factor is the degree of success obtained.

Slip op. at 12-13 (footnotes omitted). The ARB found that the cases cited by the Complainant “do not alter the Hensley position that trial judges may reduce attorney’s fees for limited success in related claims. As to the amount of the reduction, the case law is uniform: the trial judge has a large degree of discretion.” Id . at 13 (footnote omitted). The ARB found that the Complainant had not demonstrated that the ALJ abused his discretion in reducing the attorney’s fees by 50% for limited or partial success.

One member of the ARB filed a concurring opinion stating that the ALJ had not sufficiently explained how he arrived at a 50% reduction of the lodestar amount. This member noted that the Complainant had been completely successful on the merits, but had not been awarded anywhere near the amount of requested damages. The member wrote: “To arrive at a reasoned reduction of fees under the facts of this case, it makes sense to consider what percentage of the entire litigation efforts were attributable to [the Complainant’s] requests for damages. I reject the ALJ’s reduction of the fees by half because well over half of the litigation was directed to the merits on which [the Complainant] was successful—not damages. In my view, the ALJ abused his discretion by reducing the lodestar figure by half.” Slip op. at 15 (footnotes omitted).

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INTERLOCUTORY APPEAL ON DISMISSAL OF SOME RESPONDENTS; ARB DECLINES REVIEW WHERE IT WOULD REQUIRE EXTENSIVE REVIEW OF A RECORD THAT WOULD HAVE TO BE RE-REVIEWED IN A LATER APPEAL OF A FINAL DECISION; WHERE DISMISSAL OF SOME RESPONDENTS TO A MATTER IS ROUTINE; AND WHERE NO RIGHTS WOULD BE LOST IF INTERLOCUTORY REVIEW IS DENIED.

In Turin v. Amtrust Financial Services, Inc. , ARB No. 17-004, ALJ No. 2010-SOX-18 (ARB Apr. 20, 2017), the ALJ dismissed two named Respondents after the Complainant presented his case in chief over 11 days of hearings. The ALJ found that the Complainant did not establish that he was a covered employee of either entity. The ALJ ordered the parties to suggest dates to continue the hearing with the remaining Respondents. The Complainant petitioned the ARB to review the ALJ’s dismissal of the two Respondents, and the ARB ordered the Complainant to show cause why the petition should not be dismissed as interlocutory. The ARB granted the Complainant’s request for an extension on the ground that the Complainant had filed a motion for reconsideration. The ALJ denied reconsideration. Both the Complainant and the dismissed Respondents then responded to the ARB urging it to accept an interlocutory appeal.

Because the Complainant had not requested the ALJ to certify the case for appeal as provided in 28 U.S.C.A. § 1292(b), the ARB considered the petition under the collateral order exception to finality. The Complainant had argued that his appeal fell within FRCP 54(b). Under that rule, “when a trial court judge dismisses some, but not all, of the parties from the case, the trial court must certify that there is no just reason to delay the appeal and expressly direct that judgment be entered in regard to those parties before an appeal can proceed.” Slip op. at 4 n.16 (emphasis in original) (citations omitted). The ARB found that in this case the ALJ had not made a “no just reason to delay the appeal” ruling under FRCP 54(b).

Following review of the parties’ arguments, the ARB denied interlocutory review. The ARB noted that to review the matter now would require the ARB to review a full 11 days of hearing testimony and the hearing exhibits, and that the case would probably come back to the ARB later when the hearing was completed, requiring the ARB to reacquaint itself with the record. The ARB stated: “The very fact that it would be necessary to do so is a strong fact militating against a finding that this issue [of whether the Complainant was an employee of the dismissed Respondent] is completely separate from the merits. As the Supreme Court indicated in Johnson v. Jones , ‘if the matter is truly collateral, those proceedings might continue while the appeal is pending.’ But in this case both parties have argued that the case should not continue before the ALJ until this interlocutory appeal is settled because the scope of the evidence would be materially affected and the evidence presented might be prejudicial to the parties.” Slip op. at 5 (footnotes omitted).

The ARB also stated that the parties had not convinced it that the issue was unreviewable on appeal from a final judgment. The ARB wrote: “In fact, the Seventh Circuit Court of Appeals held in ‘a routine instance of a district judge's limiting the scope of the complaint by striking some of the parties and some of the claims’ that ‘[s]uch orders are made all the time and unless certified for an immediate appeal cannot be appealed till the conclusion of the proceedings in the district court. To make them automatically appealable ... would make extremely serious inroads into the final judgment rule of28 U.S.C. 1291.’” Slip op. at 6 (footnotes omitted) (quoting Flynn v. Merrick , 776 F.2d 184, 185 (1985) (emphasis as added by the ARB)).

The ARB acknowledged that should it ultimately overturn the ALJ’s finding that the dismissed Respondents were not employers of the Complainants, the parties may be inconvenienced by having to return to the ALJ for additional proceedings, but found that no rights would be lost.

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Appeal dismissed based on parties agreement that ALJ’s decision should be vacated, and the ARB appeal dismissed with prejudice.

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CLEAR AND CONVINCING EVIDENCE; WHISTLEBLOWER WHO ARGUES DISPARATE TREATMENT TO SHOW THAT AN EMPLOYER’S REASON FOR TERMINATION WAS PRETEXT, AND THUS NOT CLEAR-AND-CONVINCING EVIDENCE, MUST PROVE THAT SIMILARLY-SITUATED EMPLOYEES WERE TREATED MORE FAVORABLY

In Smith v. BNSF Railway Co. , ARB No. 15-055, ALJ No. 2013-FRS-71 (ARB Apr. 11, 2017), the Complainant, a train engineer, was discharged after his second serious safety violation within a year. The Complainant filed a FRSA complaint alleging that the severity of the discipline was in retaliation for his report during a period in which the Complainant had been reassigned as a conductor of sleep apnea and complaints during a disciplinary hearing that the Respondent was responsible for his sleep apnea due to its lack of fatigue management and policy on rest periods. Following a hearing, the ALJ found that there was overwhelming evidence that, under the Respondent’s practice and its written Policy for Employee Performance Accountability, the discharge was merited due to the Complainant’s second serious safety violation within the probationary period of a prior serious violation, even absent any protected activity. On appeal, the Complainant contended that the Respondent’s policy gave it the flexibility to impose a lesser penalty and that another comparable employee was treated differently. The ARB wrote:

   A whistleblower who argues disparate treatment to show that an employer’s reason for termination was pretext, and thus not clear-and-convincing evidence, must prove that similarly-situated employees were treated more favorably. To meet this requirement, the whistleblower must establish that employees involved in or accused of the same or similar conduct were disciplined differently. The critical factors are the nature of the offense and the degree of punishment imposed.

Slip op. at 5 (footnote omitted). The Complainant had pointed to a fellow engineer who had received a 30-day suspension rather than a dismissal for committing s second serious violation. The ARB found that substantial evidence supported the ALJ’s finding that the fellow engineer was not an appropriate comparator. The ALJ found, inter alia, that unlike the Complainant, the fellow engineer’s second violation had not occurred during the 12-month probationary period following the first violation. Also the ALJ found that the fellow engineer had worked longer than the Complainant and had no suspensions since 1994, while the Complainant had served two suspensions, one in 2004 and one in 2005, and also received a formal reprimand in 2002. The ALJ also found that evidence of other comparators convincingly showed that the Respondent had treated the Complainant under a consistently-applied serious-violation policy. The ARB also noted that other evidence of record that the ALJ had not explicitly cited supported the Respondent’s clear and convincing evidence defense—specifically the testimony of a labor relations department director who had reviewed 150 to 2007 cases of employee dismissals, including the Complainant’s case, and had recommended dismissal—and the testimony of a superintendent that the Complainant had returned to duty as an engineer after being treated for his sleep apnea and cleared for duty, and how there were no extenuating circumstances supporting a lesser penalty than discharge.

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Appeal dismissed based on Respondent’s withdrawal of its petition for review. The ALJ’s decision thereby became the Secretary of Labor’s final order in the case.